- There's a lot of excitement surrounding big data, but information needs to be readily available and actionable for it to hold relevance in the real estate industry.
- Research shows that consumers expect agents to reveal everything about properties and neighborhoods -- both the good and the bad.
- Finding a quality area to live in is the first stop before searching for a specific property.
Since the days of Consumers Digest, people have always depended on the opinions of third-party sources when selecting products and services. Big data has the answers, and up to this point, it hasn’t been usable for consumers. But RealtyTrac stepped in and changed all that. (Disclosure: I have consulted for RealtyTrac.)
So the question is, what source can consumers depend on to learn all they need to know about a neighborhood or a home before they buy?
That’s a good question. But a more important question is: Where can you find that property-related data easily accessible and all in one place?
That has not been an easy problem to solve.
Big data providers such as CoreLogic, Black Knight and RealtyTrac exist, but they are all primarily focused on what we have come to know as big data.
Massive databases of nationwide information include taxes, mortgages, deeds, MLS data and more. If you are in need of raw data, they are your source. But raw data is expensive to license and requires a lot of work to be useable.
Just ask companies such as HouseFax, which has struggled since launching its site with several iterations of a paid report strategy in an effort to provide usable data to consumers on properties across the country.
Packaging up the data and presenting it to the millions of consumers of real estate services is no easy task.
Why data for consumers isn’t an easy product to create
There are many factors that can impact the value and safety of a home beyond the physical property itself and its visible surroundings.
Home inspectors are capable of assessing what might be wrong and in need of repair, but a homebuyer needs to know much more than that to make a smart and wise purchase decision.
Buyers need to know both the good and the bad, and that is the value they receive from full disclosure.
Examples are the instances of earthquakes, tornados, hurricanes and flood areas and the presence and status of toxic spills, offenders, crime, schools, Federal Communications Commission (FCC) towers and more.
So let’s take a deeper dive.
Here’s the real question for a buyer: What is more important: Having a new swimming pool in the backyard or the knowing that two offenders live nearby? Finding a home with a good view or knowing that there was a hazardous waste dump at one time caused by a nearby dry cleaners or gas station?
As an industry, we can answer the first part of those questions, but we commonly shy away from or are incapable of responding to the second part.
A fact about homebuyers
Foremost in the minds of most homebuyers are the things they fear but do not know. In the past, buyers have chosen properties based upon a process of elimination, and that process has been fueled what they like better about other properties in the running.
But that is changing with access to more data, and a shift has occurred.
Now properties are being eliminated because of their flaws in comparison to better homes. And being able to access to data beyond what the MLS and the agent provide to make such determinations is going to become a big part of this analysis.
As an industry, we have always been the stewards of assisting the consumer in making safe and healthy buying decisions, and now there is some good news.
Finally, big data in residential real estate has now been made usable.
RealtyTrac understood this challenge and recently launched a site that has been designed to assist both the potential homebuyer and the brokerage industry. It is called HomeDisclosure, and it can be found at homedisclosure.com.
And the best news yet: as of launch, the home disclosure reports are free.
On this new site, home facts are generated from more than 50 categories of housing-related data on more than 120 million properties nationwide in real time.
In time, I believe that this site will become the consumer’s first stop for all potential home shoppers. Safety and quality of the neighborhood first, and then it’s time to go to a real estate portal and shop for a home in that area. It only makes sense.
By design, HomeDisclosure clearly seems to be headed upstream of the real estate portals, and that move in and of itself could be interesting.
Kenneth Jenny is an expert in the residential real estate brokerage industry and real estate marketing.